A couple of Republican Senators caught me by surprise on Sunday. Both Sen. Tom Coburn, and Sen. Saxby Chambliss said that raising government revenue should be considered in the attempt to balance the budget. This goes against not only the Republican budget proposal in the House, but also the Republican talking point that the governments problem is spending not revenue.
Coburn and Chambliss are both part of the “Gang of Six” who are Senators looking for a budget compromise in the Senate. Coburn has come under fire from conservative activist Grover Norquist who says he is going back on his word. Specifically, Sen. Coburn signed an oath with Americans for Tax Reform that said he would not vote to raise taxes. Coburn’s repsonse was very direct. He said:
“Well, I think which pledge is most important, David , is the pledge to, to uphold your oath to the Constitution of the United States or a pledge from a special interest group who, who claims to speak for all of American conservatives when, when in fact they really don’t.”
For a Republican to fire back at a conservative special interest group like that caught me way off guard. Sen. Chambliss was far less fiery when talking about revenue. On CNN, he said:
” Now, if we don’t want to pay the debt back, then we could just not worry about the revenues. But the fact is we’ve got a $14 trillion debt staring us in the face, and revenues has to be on the table if we’re serious about attacking that debt.”
Both quotes come from this NPR story. It’s important that two Republican senators have put raising revenue on the table. Democrats have already acknowledged that spending needs to be cut. Now, we at least have a group working at both sides of the problem, revenue and spending.
Coburn’s idea for raising revenue is certainly going to be a hard sell to Republicans. He wants to eliminate tax deductions, and credits in the tax code. This will cause businesses and individuals to pay more in taxes. Republicans have often called this a “tax increase.” As the Boston Globe reported last July, House Republicans opposed the act to give healthcare to 9\11 first responders because it included a “corporate tax increase.” The bill would have prevented foreign corporations from not paying taxes on profit earned in the US.
I don’t see that as a tax increase. Our tax code says you should pay this much. It then says if you do certain things the government will give some of that money back (a tax credit) or not tax you on that income (a tax deduction.) This is the government’s way of influencing our behavior. It is a version of positive reinforcment. For those of you not schooled in psychology, positive reinforcement is when you provide a reward for a certain behavior with the intention of increasing the probability that the same behavior will reoccur. So, when the government offers a tax credit to first time homebuyers they are trying to increase home ownership by giving a financial incentive. Taking away that tax credit is not really raising taxes it’s just not providing that incentive.
I like to use the metaphor of a retail business, perhaps a grocery store. When you walk into a grocery store everything has a price. It’s usually listed right on the shelf below the item. From time to time the store wants to encourage you to buy particular items. Maybe they have a large supply of something and they want to move some product. For a time that item costs less. As people buy enough of a particular item, the store will end the sale. Did the store raise prices? Not really. The price of that item did technically go up, but it just went to the normal rate. In the same way, when the government says a particular tax credit or deduction is expiring, they aren’t raising taxes. They are really just saying we need to start paying full price again.
Perhaps thats not important right now, but I wanted to make a point. In the end I applaud Sen. Coburn, Sen. Chambliss as well as Sens. Conrad, Durbin, Warner, and Crapo for trying to do real work for the people of this country. I hope they are successful in finding a good compromise.